London (AFP) – Stock markets dived Friday after US President Donald Trump announced tariffs on dozens of trading partners, and weak US jobs data fueled the fall. Wall Street’s Dow Jones index dropped more than 1.2 percent, while Paris and Frankfurt tumbled nearly three percent lower. The dollar gave up earlier gains against key currencies, while oil prices plunged on fears that a weakening US economy would sap demand.
Trump on Thursday unveiled his latest list of sweeping levies on about 70 economies, taking tariffs to their highest levels since the 1930s as he seeks to reshape global trade to benefit the United States. Hours later, the US Labor Department said the US economy added just 73,000 jobs in July—well below market expectations—while revising down the figures for May and June. “The US payrolls data has eclipsed news about the latest tariff rates applied to the world’s economies by Donald Trump, and is now dominating markets,” said Kathleen Brooks, research director at XTB trading group. Earlier, she noted, tariffs had been “the main theme sucking risk sentiment from financial markets.”
Economists have warned that high tariffs—touted by Trump as a way to boost US industry—could fuel inflation in the United States and harm its economy. Data on Friday showed US unemployment ticked up to 4.2 percent from 4.1 percent. “The slowdown in jobs started in early Q2 (second quarter) when reciprocal tariffs were announced” at the start of Trump’s initiative, Fawad Razaqzada, market analyst at City Index and FOREX.com, told AFP in an email. “Companies expecting margins to be squeezed by higher duties probably thought twice about hiring workers in order to keep costs down. So, the US labor market has been losing steam fast, undoubtedly due to tariff concerns.”
The US Federal Reserve this week held interest rates unchanged, despite massive political pressure from the White House to cut. “The market now seems to think that two months’ worth of weak labor market data is enough for some rapid rate cuts from the Fed” in the coming months, Brooks said.
– Blistering tariff rates
Trump has delayed the implementation of the tariffs several times—the latest move pushing them back a week to August 7. Some trading partners have reached deals with the United States—including Britain, the European Union, Japan, and South Korea. China remains in talks with Washington to extend a fragile truce in place since May that is due to expire on August 12. For those targeted in the latest round, tariff rates range from 10 percent to 41 percent—including a blistering 35-percent rate on Canada and 39 percent on Switzerland. Tariff uncertainty overshadowed earnings from major tech titans this week. In Frankfurt, “even exceptionally strong earnings from Microsoft are failing to provide a boost to the broader market,” said Jochen Stanzl, Chief Market Analyst at CMC Markets.
– Key figures at around 1545 GMT –
New York – Dow: DOWN 1.2 percent at 43,594.42 points
New York – S&P 500: DOWN 1.4 percent at 6,250.54
New York – Nasdaq: DOWN 1.9 percent at 20,731.65
London – FTSE 100: DOWN 0.7 percent at 9,068.58 (close)
Paris – CAC 40: DOWN 2.9 percent at 7,546.16 (close)
Frankfurt – DAX: DOWN 2.7 percent at 23,425.97 (close)
Tokyo – Nikkei 225: DOWN 0.7 percent at 40,799.60 (close)
Hong Kong – Hang Seng Index: DOWN 1.1 percent at 24,507.81 (close)
Shanghai – Composite: DOWN 0.4 percent at 3,559.95 (close)
Euro/dollar: UP at $1.1552 from $1.1421 on Thursday
Pound/dollar: UP at $1.3259 from $1.3208
Dollar/yen: DOWN at 148.07 yen from 150.68 yen
Euro/pound: UP at 87.13 pence from 86.43 pence
West Texas Intermediate: DOWN 2.6 percent at $67.45 per barrel
Brent North Sea Crude: DOWN 2.71 percent at $69.76
© 2024 AFP
